Factors to determine the contributions:

Discuss about the Educational Background & Corporate Crime Tolerance.

There are 3 sectors in an economy. These are the primary sector (i.e. the sectors engaged in extracting of resources e.g. raw material), secondary sector (i.e. the sector that is responsible for producing the final product) and lastly the tertiary sector (i.e. the sector that provides services. The third sector i.e. the sector that provides services are responsible for providing services. There are different forms of services, for example providing guidance, awareness, observation, knowledge, and labor. This sector engages in delivering services to other business and other end users as well. Since we know that in the last 100 years, there have been considerable shift from the primary sector and secondary sector to the tertiary sector industry. The shift is named as tertiarisation. The tertiary sector is the biggest sector in the economy in the west world. It is a rapid-growing sector. The economies are driven to follow a developing progress that takes them away from the heavy dependencies on the primary sector, towards developing the manufacturing (e.g. building of ship, textile, steel, etc) and atlast towards the third sector i.e. the serive based sector (Abdullah & Said, 2017).

Discussed below are the factors that determine the contributions of service sector employees to the Defined Benefit Plan or the Investment Choice Plan. Also we have analysed the time value of money and , taxes, etc in this decision making process.

This is the most important factor for investment plan. It reflects how longer the investment shall remain be invested. The short term maturity investments are done where there is a less chance of going down with respect to their value inorder to ensure that the money is readily available incase of need. We know that short term investments are benefitted for risk reverse investors and long term investements are benefitted for risk averse investors.

It refers to the level of risk taken by an investor incase the value of the investment made by him/her decreases drastically. In many cases, we observe that higher risks bearing earns higher returns, whereas low risk tolerance earns lower returns (Boghossian, 2017). It is in the hands of the investor, that he is in a position to bear hiher risk and is ready to take the possibility of losing money for earning higher return on investment made.

The knowledge and experience of the investor are the esstential parameters for the choice of investment. The investors who are may opt to believe on the advice on their own mates, collegues, family , or with the advice of investment adviser in order to choose which investment to be made. The individuals who have enough experience opt to select their own investment (Bouret, 2017). To have a better understanding of the possible return to be earned, and have a clear picture of the risks that might involve, helps the investors to choose incase those bonds, stocks and other investments matches with their portfolio.

Time Period

The earnings of the individual and the net worth are essential parameters to make the investment preferences. For example, in order to purchase some equity shares (equity based investment), such as stocks, it generally involves spending of huge dollars capital, whereas when we put our investment in mutual funds, it shall need only few hundred dollars. Those investors that have a huge amount stored as capital have access to a wide range of investements choices, whereas new and small investors that have comparatively less capital net worth, shall have access to often very limited choices for investment preferences.

The largest among other individual, the superannuation fund is Unisuper Ltd which manages the superannuation for the personnel in the tertiary sector in Australia.With the growing choice in investment , Unisuper ltd provides its members 2 types of superannuation plans:

• Investment Choice Plan.
• Defined Benefit Plans

With regards to the Defined Benefit Plans, is the one where the benefit provided to personnel at the time of retirement is determined by applying a formula, which takes into account the various attributes like, final average salary, age of the employees and number of years since when they have been employed. The risks in investment is borne by Unisuper ltd itself. It means that the personnels do not earn from the income achieved by their asset portfolio. It shall be the task of the trustees of Unisuper ltd to provide fund to these defined benefits (Cayon, et al., 2017)

The personnel who opt for Investment choice plan keep and individual investment account consisting of the sponsorship of employer and that of the individual  superannuation contributions and a yearly distributing of income earned by their invested contributions, minus any administrating and management charges. Under this plan, the personnels can choose the class of assets that their contribution to superannuation is invested in, by selecting among four strategies of investment:

Secure Fund: The securities paying interest  at a fixed rate and cash.

Stable Fund: It is at core fixed interest and bonds , that has a small presentation to domestic and abroad shares and property.

Selection fund of Trustees: The remaining funds of native and abroad shares, assets of property, and private equity investements.

Shares Fund: The only investement in inland and abroad shares (Delone & Mclean, 2004).

At the time of retiring, Unisuper ltd provides a wide variety of investment plans for both Investment choice plan and Direct Benefit Plan members to manage and give away the benefits of retirement. This is inclusive of the underlisted pension and rest investement options:

Tolerance level of uncertainty

Indexed Pension: It gives a systematic income that is indexed to inflation, and pays till the life of investor and then is transferrable to the spouse or the dependent person at the time of death.

Single Life Indexed Pension: It gives away a comparatively more income with respect to standardised indexed pension as mentioned above, but the only drawback is that it cannot be transferred in the name of spouse or any dependent at the time of death.

Allocated Pensions: It gives away standardised revenue, access to the capital, if necessary and other four kept strategic investment, in accordance with which the capital can be invested. Incase of death, the balance held in pension is given away among the dependants.

Roll-over Options : It gives a choice to transfer the balance fund in retirement, to a personally approved or industry superannuation, investment fund,  the deposit fund which is approved or a retirement savings account.

Part cash Distributions: It gives a choice to withdraw certain % of the retirement fund, as a lump sum cash, so that it can be used for investing or individual personal consuming purposes. The investors can select a blend of all the above alternatives, with a cautious sight to meet their earnings and standard of living at the time of retirement (Anon., 2017).

The major issues realting to time value of money and taxes in decision making process, to consider for the Defined benefit plans:

• The formula of retirement benefit can change over the period of time.
• The growth rates of future repayment are not possible to predict.
• It is not possible to judge in advance that how long will a personnel work for a company.
• The rules and regulations of actuaries, makes it necessary that the pension benefit obligation takes into consideration the growth estimates in salary, but however it fails to take into account any would be future service(Coate & Mitschow, 2017).
• It is not possible to judge how long the personnels will work for the employer long enough to enjoy and achive their benefits of retirement.
• It is also not possible to know beforehand, that how long will a personnel live after retiring.
• It is problematic to know that sort of payout choice the personnels will choose, as their beneficiary might change over the time period.
• It is not possible to the rate of discount used to discount, in order to determine the present value of the benefits of retiring, at the time of retirement.
• Also it is not possible to assume the discount rate, which should be applied to know the present value of the retirement benefit today(Wang, et al., 2018).

Conclusion:

We noted that the primary focus on superannuation and urging the employees to save and store for their bright future by investing and specifically for their years of retirement. The governing body of Australia has been very active with this respect, and had taken the initiative by mandating minimal contribution that should be made to comply superannuation or the funds of retirement by the employers on behalf of the enmployees. At first the miniumum level of contribution by the employers was 3% of the salary earned by employees, gradually it increased to 9% by 2005. Also the employees are mandated to make percentage of their income to the superannuation investement by this time/date. The objective behind introducing the poliy of superannuation initiative is to abolish the burden from the society, the system of security for the provison of pension amounts to provide support to the persons at the time of their retirement. Due to introduction of these superannuation benefits and investment, there has been a considerably increased realisation by employees and they have realized the imporatance of savings to be made for their future. It is this reason, that billions of dollars are being invested and kept as superannuation fund, just for the sake of the needy people in their retirement years. The ultimate role of these investments of to properly invest these funds into profitable and safe areas in order to generate income to distribute among the non-working class of individuals lives. Many countries have maintained funds for theirs citizens and residents to give away earining at their retirement (in many cases to disble individuals as well). Examples are Natioanl Insurance in UK, Social Security in United States of America.

It is the recommendation of SWG that the trustrees of superannuation entities should obtain licence from APRA. In order to ontain such licence, a trustee should be:

• It has to meet the minimal criteria of competence.
• It should have sufficient resources in place.
• It should have sufficient risk managing measures in place,inclusive of plan of risk management, and proper arrangements for complying with the plan.
• It shall meet all the rules and regulations as mentioned by APRA.
• It has sufficient way to outsource and arrangements in place.
• The licencees shall have to abide by the licence obtaining rules, on an on-going basis.

So all these points must be considered in case of deciding which plans to opt for so that in future the return is maximum for the employees.

References

Abdullah, W. & Said, R., 2017. Religious, Educational Background and Corporate Crime Tolerance by Accounting Professionals. State-of-the-Art Theories and Empirical Evidence, pp. 129-149.

Anon., 2017. Explaining auditors’ propensity to issue going-concern opinions in Australia after the global financial crisis. Accunting and Finance, pp. Carson,E;Fargher,N;Zhang,Y;.

Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.

Bouret, I., 2017. Benefits of higher education in mid-life: A life course agency perspective. Journal of Adult and Continuing Education, 23(1), pp. 15-31.

Cayon, E., Thorp, S. & Wu, E., 2017. Immunity and infection: Emerging and developed market sovereign spreads over the Global Financial Crisis. Emerging Markets Review.

Coate, C. & Mitschow, M., 2017. Luca Pacioli and the Role of Accounting and Business: Early Lessons in Social Responsibility. s.l.:s.n.

Delone, W. & Mclean, E., 2004. Measuring e-Commerce Success: Applying the DeLone & McLean Information Systems Success Model. International Journal of Electronic Commerce, 9(1).

Wang, Z., Chiu, Y., li, Y. & Hsiao, L., 2018. Performance appraisal for the operation and management of listed and OTC Taiwanese companies with DEA benchmarking models.